The Crypto Basic

Market data suggests that the latest XRP decline had more to do with activity in the derivatives market than with investors selling their XRP on the spot market. 

After climbing to around $1.29 earlier this week, XRP has lost more than 13% of its value and slipped to roughly $1.12. While most traders would attribute this drop to spot selling, the data shows that the leveraged traders had the bigger contribution.

XRP Open Interest and CVD See Sharp Declines

One of the indicators suggesting this is the Binance Open Interest (OI). For context, open interest measures the total value of active futures and perpetual contracts, and traders often use it to track the level of speculative activity in the market.

According to the data sourced from CryptoQuant, Binance OI fell from about 255 million to 215.4 million within 24 hours, marking a decline of 14.5%. 

When open interest drops alongside price, it usually means traders are closing positions either by choice or through forced liquidations in a process called deleveraging or leverage unwinding. This suggests that many leveraged long positions were pushed out of the market as XRP moved lower. 

Further evidence comes from Binance Perpetual CVD (Cumulative Volume Delta). Notably, this indicator measures the difference between aggressive buying and aggressive selling in the perpetual futures market.

During XRP’s decline, the metric dropped to -802.8 million, showing that sellers heavily outweighed buyers in futures trading. The move indicates that leveraged traders aggressively sold into the market as prices weakened.

As a result, much of the downward pressure seems to have come from futures traders closing positions rather than from long-term investors exiting XRP.

XRP Spot Market Selling Relatively Light

Meanwhile, the Binance Spot CVD did not experience as much decline as the futures CVD and OI. Specifically, the indicator declined to around -158.7 million, a much smaller drop than the one recorded in the perpetual futures market.

Notably, if investors had been rushing to sell their XRP holdings, spot-market selling would likely have been much closer to the scale of the futures-market activity. However, the data shows that spot selling remained relatively limited while derivatives traders drove most of the decline.

When spot-market selling drives a decline, it can indicate that investors are losing confidence and distributing their holdings. Such conditions often lead to more extended downtrends.

However, a decline caused mainly by liquidations and falling open interest can look very different. Once leveraged traders have been forced out, much of the selling pressure may disappear because the forced sellers are no longer active.

This does not necessarily mean XRP has already found a bottom. However, it does suggest that the market may be moving toward a healthier structure after clearing out excessive leverage.

Signals to Watch Going Forward

Right now, the first thing to monitor is whether open interest stabilizes around the current level. 

If OI stops falling while XRP maintains support, it could indicate that the liquidation phase is nearing its end. On the other hand, continued declines in OI may suggest that more leveraged positions still need to be cleared out.

Further, the Spot CVD is extremely important. So far, the decline in Spot CVD is much smaller than the move seen in futures markets. 

If this metric stays relatively stable, it confirms that leverage unwinding caused the drop. However, a sharp increase in spot selling would point to broader investor selling and could create additional downside risks.

Investors should also watch Perpetual CVD after its fall to -802.8 million. A recovery in this indicator would show that aggressive futures buyers are returning to the market.

XRP community figures Eri and Jake Claver recently argued that XRP value goes far beyond cross-border payments.

In a post on X, Eri shared a clip from a recent livestream by Digital Ascension Group chairman Jake Claver. The discussion focused on the so-called “stablecoin sandwich” model.

Eri said she agreed with two of Claver’s key points. One of them is that Ripple has already used stablecoins such as USDT and USDC as bridge assets in its On-Demand Liquidity (ODL) service.

Ripple Already Used Stablecoins in ODL

According to Eri, Ripple’s payment infrastructure has previously incorporated Tether and USDC as bridge assets. These transactions were facilitated through the XRP Ledger’s decentralized exchange (DEX), helping reduce costs and improve transaction speed.

Meanwhile, Eri added that Ripple’s RLUSD stablecoin is being positioned in a similar way. She pointed to comments from Ripple’s UK and Europe Managing Director, Cassie Craddock, who recently said Ripple Payments has been built around a stablecoin bridge.

The community commentator said investors should pay close attention to new high-quality trading pairs added to the XRPL DEX and focus on transaction volume and liquidity metrics rather than narratives circulating online.

XRP Role Beyond International Payments

In the livestream clip, Claver addressed ongoing talks about XRP’s future value. Specifically, he discussed whether XRP can reach high valuations without becoming the primary bridge asset for global payments.

He explained that a stablecoin sandwich involves converting fiat currency into stablecoins such as USDC. Those stablecoins are then transferred across blockchain networks before being converted back into local currencies. This allows international money movement without direct exposure to cryptocurrencies.

However, Claver argued that financial institutions will ultimately choose the most efficient settlement option available.

“If there is a faster, cheaper way to settle payments, it will route through XRP,” he said.

Claver also rejected the notion that XRP’s success depends entirely on replacing SWIFT or dominating cross-border payments. In his view, international payments represent only one of many use cases for the asset.

XRP’s Potential in Collateral and Market Infrastructure

Claver said he sees XRP’s long-term role extending into market settlement infrastructure and serving as collateral for derivatives markets.

Similarly, Eri noted that XRP has numerous applications outside payments, including collateral and decentralized finance. She also referenced comments from Evernode CEO Asheesh Birla, who has previously spoken about new financial products on the XRP Ledger that have yet to be imagined.

According to Claver, XRP could become more efficient than stablecoins if it reaches sufficient liquidity and value. Combined with the XRP Ledger’s built-in DEX and interoperability features, it would offer a cheaper and faster settlement option.

He argued that institutions seeking low-cost settlement and seamless asset swapping may ultimately prefer a highly liquid bridge asset like XRP over stablecoin-based transfers.

Portfolio manager of The Free Markets ETF, Michael Gayed, has once again captured the attention of the XRP community with a cryptic social media post.

Taking to X, Gayed shared a single-word message: “XRP.” The post contained no analysis, commentary, or price prediction, prompting many users to speculate about its meaning. However, Gayed did not explain, leaving followers to interpret the message on their own.

Nonetheless, the post continues Gayed’s recent pattern of referencing XRP and engaging with its highly active community.

XRP Community Welcomes Another Show of Support

Over the years, Gayed has earned a reputation among XRP supporters for his consistently bullish commentary. Regardless of market conditions, he has frequently rallied the “XRP Army” through posts such as “Where the XRP Army at?”

In addition, Gayed has demonstrated his enthusiasm for the token by creating and sharing multiple XRP-themed songs with the community. Given this history, many market participants viewed the latest post as another indication of his interest in XRP rather than a detailed investment thesis.

As expected, XRP supporters responded positively. Many interpreted the mention as a form of recognition, or even endorsement, from the well-known market commentator.

However, not everyone shared that enthusiasm. Some cryptocurrency advocates questioned the basis of Gayed’s continued support for XRP, arguing that he rarely provides detailed explanations for his optimistic outlook.

Gayed Bullish on Global XRP Adoption

Meanwhile, several users pointed to Gayed’s broader thesis regarding XRP’s long-term adoption prospects. According to Gayed, XRP adoption could expand globally, with Japan potentially leading the way through its banking sector. 

He believes three key factors could drive this growth: Japan’s clear digital-asset regulations, strong demand for cross-border payment solutions, and the country’s long-standing connection to the yen carry trade.

Last year, Gayed argued that Japanese financial institutions are already advancing XRP adoption through real-world payment use cases. He highlighted SBI Remit as a notable example.

According to him, SBI began using XRP in 2021 to facilitate remittances between Japan and the Philippines. The company later expanded the service in 2023, enabling direct bank-account payouts in the Philippines, Vietnam, and Indonesia.

XRP Declines Alongside Broader Crypto Market

Gayed’s latest commentary comes at a time when XRP and the broader cryptocurrency market are facing renewed selling pressure.

Over the past 24 hours, the total crypto market cap has declined by 1.24% to $2.15 trillion, leading to the liquidation of $453 million over the past day. XRP has also recorded losses during the same period, falling 3.07% to trade at $1.12 at press time. The token recorded $6.77 million in liquidations, with long positions making up $6.3 million of the total.